Understanding the Effect of a Soft Drinks Industry Levy on Consumer Well-Being in the UK: First Estimates

Fage, Bradley and Vasilev, Aleksandar (2021) Understanding the Effect of a Soft Drinks Industry Levy on Consumer Well-Being in the UK: First Estimates. ECONOMICS, 9 (1). pp. 25-42. ISSN 2303-5005

Full content URL: https://doi.org/10.2478/eoik-2021-0001

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Understanding the Effect of a Soft Drinks Industry Levy on Consumer Well-Being in the UK: First Estimates
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Abstract

This paper is a first attempt to provide a quantitative evaluation of consumer well-being resulting from the UK Soft Drinks Industry Levy introduced in April 2018. Using a model setup that encompasses both a normal case and a Giffen case for sugary drinks consumption, a computational exercise is performed to quantify the welfare social loss for a variety of household incomes. The model demonstrates that the introduction of a soft drinks levy results in a non-trivial welfare loss, particularly in terms of monetary value and weight effect. We also find that the wealthiest individuals in society are affected positively by this levy, whilst the poorest segment of the population are adversely affected, especially in the presence of a binding nutritional constraint.

Keywords:Soda tax, sugary drinks, Gi?en goods, nutritional constraint, welfare social loss
Subjects:L Social studies > L100 Economics
Divisions:Lincoln International Business School
ID Code:46883
Deposited On:11 Oct 2021 14:11

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